Bank of England holds Base Rate at 3.75%: Takeaways for advisers and landlords

With no change to the Bank Base Rate again, our Chief Commercial Officer, Steve Cox, explains what this means for advisers and their landlord clients.

“Today’s decision to hold Bank Base Rate at 3.75% feels like a sensible option but still shows the difficult balancing act facing the MPC. Economic growth remains subdued, with GDP having contracted by 0.1% in April, however with inflation staying steady at 2.8% this appears to have given the MPC further leeway in terms of maintaining the status quo.  While it now looks like we have a peace plan agreed in the Middle East, the impact on energy prices and supply chains is still going to be felt for some time. And that’s if the plan holds. It is therefore entirely understandable, and in my view right, that the majority of Committee members have voted to hold again. Financial markets may be pricing in one rate rise this year, but today’s decision suggests policymakers want more clarity before taking that step.

“For the buy-to-let market, the encouraging news is that mortgage pricing tends to be detached from short-term expectations around Bank Base Rate anyway. In recent weeks, calmer financial markets and growing confidence that tensions in the Middle East may not escalate further have helped improve funding conditions, allowing lenders across the market, including Fleet, to reduce rates. While swap rates will continue to respond to economic data and global events, advisers and landlord clients can take confidence from the fact product pricing has been moving in the right direction despite ongoing uncertainty around monetary policy.”